Opportunitiesa.Establishing cost-effective ways to get goods to India’s rural dwellers is the critical first step in penetrating these markets. Smart companies have found that they need to focus on distribution even before making the seemingly commonsense moves of identifying and approaching target customers. b.A lean supply chain is essential for profits, as dispersed rural populations and inadequate infrastructure facilities mean that making money at scale is harder. Threatsa.Rural demand is volatile and is seasonal as well. If competitors rush in to meet demand in case of stock out, then HUL will not only lose potential sales but also the consumer itself as rural customers are known to be more brand sticky. b.The smaller size of the product range that can be carried. This again can help competitors gain a toehold in rural markets. c.Developing a Distribution Strategy
4)What are the other measures taken by the FMCG giant to beat the recession?Ans.Lower price points are likely to help the hard-pressed consumer goods companies find new consumers for products ranging from chocolates to kinds of toothpaste to biscuits, at a time when demand is getting more and more depressed amid an entrenched slowdown in Asia's third-largest economy. Going big on small packsHindustan Unilever, India's FMCG bellwether, was a pioneer in this area. It launched a miniature, Rs 10 sachet of its hugely popular Surf Excel detergent a few years ago. Such packs allow them to reach first-time users more effectively, introducing our offerings to them. They are particularly useful to drive market development of nascent categories. Also, small packs/sachets allow companies to make quality and aspirational products available to consumers at affordable prices. Although the Rs 10 bandhas caught on in a big way for FMCG companies, this is by no means the only innovative price point. Companies have launched mini versions of their products at Re 1, Rs 2 and Rs 5at various points. Strategies for Marketing & Trade ChannelsStrategic In-store marketing could be increased during the festive season where there could be a boost in sales. Offering high margins to the trade channels depending on the type of channels general, wholesale, retail or modern trade. Cost reduction can be done by keeping a check on Ad-spends and postponing the new launches as the market is not that conducive during the
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- Spring '17
- Rupesh Krishna Shrestha
- Macroeconomics, Recession, Fast moving consumer goods